Amy Rauch Neilson relates the stories of successful individuals and investment clubs willing to share the reasons for their success.

The Beardstown Ladies: Lessons taught, lessons learned and moving on.

By Amy Rauch Neilson

The stock market seems to have a way of holding all of us in check. For investors who choose to "play" the market - frequently buying and selling shares on a daily or weekly basis in the hopes of predicting a company's future and striking it rich - there always seems to come a time, sooner or later, when the laws of nature prevail.

And so it was with the Beardstown Ladies Investment Club back in 1998, when the media converged on them, challenging the accuracy and intent of the club's self-proclaimed 23.4 percent annual return. That's not to say for even a moment that the Beardstown Ladies are in the same league with the johnny-come-latelys of the stock market. In fact, their story is quite the opposite.

The Beardstown Ladies are a group of 13 women from Beardstown, Ill. who organized an investment club in 1983. The ladies' objective? To learn about investing in the stock market so they could manage their own money more effectively.

On the advice of their broker they became members of the National Association of Investors Corporation, a non-profit investment education association headquartered in Madison Heights, Michigan. Like Inve$tWare, NAIC is a proponent of buying stock in companies with good track records and holding on for the long term.

And they began to study stocks, learn about the stock market, and, of course, invest. Their hard worked paid off and the ladies watched as their portfolio grew to its current value which is over $400,000.

Their success didn't go unnoticed. In fact, the ladies - most of whom were senior citizens - drew national attention for their ability to successfully pick stocks. Soon, club members were traveling around the country, sharing what they had learned and forming a camaraderie with investments clubs across the nation. In 1992 the ladies were approached by a video producer who asked to do a video to share their story about getting involved in investing through an investment club. "Cooking Up Profits" received a senior citizens OWL Award in 1993. Next, a Producer in New York asked to do a book based on the video. "The Beardstown Ladies Common Sense Investment Guide" became an instant best-seller and soon was being published in seven different languages. This led to four more books and more traveling than the ladies ever dreamed possible. They were happy to share the knowledge that they had learned to motivate others to save and learn about investing.

For the Beardstown Ladies, it was the deviation from their comfort zone - in an attempt to quell the fast-paced, number-hungry media - that got them into trouble. Senior partner Betty Sinnock explains in her own words what happened in a club-issued press release. "In 1991, a producer of CBS This Morning called and asked to feature our club for the second time. They wanted us to be on the show January 2, 1992 and they wanted to know what our annual return had been and how we had fared against the Dow. Because of this, I figured the annual return manually and I subtracted our payments from the gain. We also subtracted the NASDAQ stocks to find the return for those stocks that we held on the NYSE. The result was a fantastic 59.5 percent on the NYSE stocks and a 54.4 percent total return for 1991.

"In 1992, the club offered to buy the NAIC Accounting Software if I could get permission to use it on a computer at the bank since I didn't own a computer. I entered the data as of 12/31/91 and I thought I was inputting the data so the first eight years would be included in our returns. Because of this, when the computer showed an annual return for our members in 1993 of 23.4 percent, I thought it was for the first 10 years and shared the information with the rest of the ladies and with the producer of our video, which had recently been completed…

"We have since learned that the 23.4 percent was for a two-year period and not for the first 10 years as we had always thought. We are truly sorry and pray that the people who have bought our books did so because they wanted to learn something about investing in the market and not because the figure 23.4 percent was printed on the cover. "

Looking back, Sinnock said it was definitely a difficult time for the club, but, along the way, rays of light kept shining through. Dozens of letters in support of the Ladies' began pouring in. "We are a group of ER nurses in Chicago, and recently started our investment club (ER 2000)," wrote one investor. "We modeled our group with the recommendations we found in your books. It wasn't the bottom line of your club that impressed us most, it is who you are, and what you have accomplished that helped inspire me and my partners to enter the world of the stock market.The Beardstown Ladies are a strong group of women who've managed to travel through the dark tunnel of negative publicity that hit the national media in 1998 and come out on the other side.